China's Yashili plans $210M milk operation in NZ

China's Yashili International to set up shop in NZ with
$210M milk processing operation

By Paul McBeth

Jan.
11 (BusinessDesk) - Yashili International Holdings, which
manufactures and distributes infant milk formula products in
China, is the latest Chinese company looking to invest in
New Zealand, with plans to build a 1.1 billion yuan ($210
million) processing plant.

The Chaozhou City,
Guangdong-based company's board signed off on a project to
set up a manufacturing facility in New Zealand to process up
to 52,000 tons of finished and semi-finished products
including base milk powder by the second half of next year,
according to a statement on the Hong Kong Stock Exchange.
Yashili currently sources most of its raw milk from New
Zealand.

The company will spend 950 million yuan on
acquiring land and building the plant, and a further 150
million yuan as working capital for a New Zealand
subsidiary.

The local unit, Yashili New Zealand Dairy Co,
was incorporated in July last year according to Companies
Office records and has entered into a conditional agreement
to buy land where the facility will operate. The acquisition
is subject to certain conditions, including approval from
the Overseas Investment Office.

The investment comes a
month after China's Inner Mongolia Yili Industrial Group
flagged plans to spend some $214 million buying and
upgrading Oceania Dairy Group's South Canterbury milk powder
plant.

Chinese investment in New Zealand has been a
heated topic in recent years after bids to buy large tracts
of farm-land forced the government to announce a U-turn on
its plans to free up overseas investment and a High Court
ruling made the OIO impose a more rigorous analysis of
foreign purchases.

Yashili was set up by brothers Zhang
Lidian and Zhang Likun in 1998 and is ultimately controlled
by the Zhang family. US private equity firm Carlyle Group
bought a stake in the Chinese company in 2009 to ramp up its
research and production, and raised HK$2.7 billion when it
floated a minority share in Hong Kong the following year.

The shares gained 0.4 percent to HK$2.38 in trading
yesterday, and have almost doubled in the past 12 months.

Chairman Zhang Lidian is on the Chinese committee of the
International Dairy Federation, and serves as a
representative for the Guangdong province in the National
People's Congress, according to Yashili's website.

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